ACIT, Uttar Pradesh V. M/s. J.K. Construction, Uttar Pradesh

ITA 3003/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81692 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY : JUDICIAL MEMBER ITA NO. 3003 /DEL/201 3 ASSTT. YR: 200 9 - 10 ACIT, CIR. MORADABAD , VS. J.K. CONSTRUCTION, CIRCLE - 1, MORADABAD. ZEENA INAYAT KHAN, RAMPUR, UTTAR PRADESH. PAN: AAE FJ 8820 B ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI VIVEK NANGIA SR. DR ASSESSEE BY : NONE (WRITTEN SUBMISSIONS) DATE OF HEARING : 17 - 09 - 2014 DATE OF ORDER : 22 - 09 - 2014. O R D E R PER S.V. MEHROTRA, A.M: - THIS APPEAL, PREFERRED BY THE REVENUE, IS DIRECTED AGAINST ORDER DATED 0 4 - 0 3 - 201 3 PASSED BY THE LD. CIT(A) , BAREILLY , IN APPEAL NO. 1126/JCI T (OSD)/MBD/11 - 12 , RELATING TO A.Y. 200 9 - 10 . 2. NONE PUT IN APPEARANCE ON BEHALF OF THE ASSESSEE AT THE HEARING . W E PROCEED TO DISPOSE OF DEPARTMENTAL APPEAL AFTER HEARING THE LD. DR AND THE WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 12,97,970/ - . DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS REQUIRED TO PRODU C E BOOKS OF ACCOUNT ALONG WITH ALL THE BILLS/ VOUCHERS FOR PURCHASES AND ALSO DETAILS/ DOCUMENT S IN SUPPORT OF LABOUR CHARGES. AFTER CONSIDERING THE ASSESSEE S SUBMISSIONS, THE AO POINTED OUT THAT THERE WAS FALL IN NET PROFIT DURING THE YEAR UNDER CONSIDERATION FOR WHICH NO SATISFACTORY EXPLANATION WAS PROVIDED . AO REJECTED THE BOOKS OF A/C BY INVOK ING THE PROVISIONS OF SECTION 145(3) AND PASSED THE ASSESSMENT ORDER U/S 144. HE APPLIED THE RATE OF 5% ON GROSS RECEIPTS IN THE P&L A/C TO WORK OUT THE NET PROFIT OF THE ASSESSEE, WHICH WORKED OUT AT RS. 51,36,409.6 AS 2 AGAINST NET PROFIT OF RS. 5,77,060/ - DISCLOSED BY THE ASSESSEE AND ACCORDINGLY MADE AN ADDIT I ON OF RS. 37,20,670/ - . 4. BEFORE LD. CIT(A) , THE ASSESSEE HAD FILED WRITTEN SUBMISSIONS. LD. CIT(A) CALLED FOR A REMAND REPORT FROM AO. LD. CIT(A) DID NOT ACCEPT THE AO S ACTION IN REJECTING THE BOOK S OF A/C AFTER CONSIDERING THE ASSESSEE S SUBMISSIONS THAT MERELY BECAUSE SOME PURCHASE VOUCHERS COULD NOT BE PRODUCED, THE REJECTION OF BOOK RESULTS WAS NOT JUSTIFIED. HOWEVER, SINCE ALL BILLS AND VOUCHERS WERE NOT AVAILABLE FOR VERIFICATION, CONSIDERING THE PAST HISTORY OF THE CASE HE DIRECTED THE NET PROFIT TO BE TAKEN AT 2.78%. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE DEPARTMENT IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN HOLDING THAT THE AO WAS NOT RIGHT IN REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) WHEREAS THE AO HAD GIVEN COGENT REASONS TO REJECT THE BOOKS OF ACCOUNTS WHICH MAKE HIS ACTION REASONABLE AND JUSTIFIED. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN HOLDING, ON THE ONE HAND, THAT THE AO WAS NOT RIGHT IN REJECTING THE BOOKS OF ACCOUNTS AND, ON THE OTHER HAND, DIRECTING THE AO TO COMPUTE THE NET PROFIT OF THE ASSESSEE BY APPLYING N.P. RATE OF 2.78% ON TURNOVER, WITH OUT APPRECIATING THE FACT THAT THE AO CANNOT ESTIMATE THE NET PROFIT BY APPLYING CERTAIN N.P. RATE ON TURNOVER WITHOUT FIRST REJECTING THE BOOKS OF ACCOUNT. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO COMPUT E THE NET PROFIT OF THE ASSESSEE BY APPLYING N.P. RATE OF 2.78% IN PLACE OF 5% AS DONE BY THE AO, WITHOUT GIVING ANY COGENT REASON AND JUSTIFICATION FOR REDUCING THE NP RATE FROM 5% TO 2.78% TO ESTIMATE THE NET PROFIT OF THE ASSESSEE. 5. WE HAVE HEARD LD . DR AND PERUSED THE ENTIRE MATERIAL AVAILABLE ON RECORD INCLUDING THE WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSEE. IN OUR CONSIDERED VIEW, THE AO WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF 3 145(3) PARTICULARLY WHEN BOOKS OF A/C WERE DULY AUDIT ED, B ECAUSE HE DID NOT POINT OUT ANY SPECIFIC BILLS/ VOUCHERS WHICH WERE MISSING AND HAD ONLY MADE A BALD S TATEMENT TO THAT EFFECT. UNDER SUCH CIRCUMSTANCES, THE LD. CIT(A) WAS JUSTIFIED IN ACCEPTING THE BOOKS OF A/C. HOWEVER, ADMITTEDLY ALL THE BILLS AND VOUCHERS WERE NOT AVAILABLE, THEREFORE, HE HAD ESTIMATED THE NET PROFIT AT 2.78% KEEPING IN VIEW PAST HISTORY . WE SEE NO REASON TO INTERFERE IN THE ORDER OF CIT(A) AND, ACCORDINGLY, UPHOLD THE SAME. 6 . IN THE RESULT, REVENUE S APPEAL IS DISMISSED. ORDE R PRONOUNCED IN OPEN COURT ON 22 - 09 - 2014. SD/ - SD/ - ( A.T. VARKEY ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22 - 09 - 2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR